1. Consolidated Report to the Financial Community
Fourth Quarter 2008
(Released February 24, 2009)
4th Qtr.
After-Tax EPS Variance Analysis
HIGHLIGHTS
4Q 2007 Basic EPS – GAAP Basis $0.88
Special Items – 2007 0.02
• Normalized non-GAAP* earnings, excluding 4Q 2007 Normalized Earnings – Non-GAAP Basis* $0.90
special items, were $1.21 per share for the fourth Distribution Deliveries (0.01)
quarter of 2008, compared with $0.90 per share Generation Revenues 0.04
Fuel & Purchased Power (0.04)
for the fourth quarter of 2007. GAAP earnings
Coal Contract Assignment 0.04
for the fourth quarter of 2008 were $1.09 per
Generation O&M Expenses 0.12
share compared with $0.88 per share in the prior Energy Delivery Expenses 0.08
year. Transmission Costs 0.07
Pension and Other Employee Benefits 0.04
• Normalized non-GAAP* earnings for 2008, Transition Cost Amortization – OH (0.02)
Depreciation (0.03)
excluding special items, were $4.57 per share,
General Taxes (0.03)
exceeding the top of our earnings guidance of Investment Income – NDT and COLI (0.02)
$4.30 to $4.40 per share. This also compares Financing Costs (0.01)
favorably with 2007 normalized, non-GAAP Effective Income Tax Rate 0.09
Other (0.01)
earnings of $4.23 per share. GAAP earnings for
4Q 2008 Normalized Earnings – Non-GAAP Basis* $1.21
2008 were $4.41 per share, compared with $4.27
Special Items - 2008 (0.12)
per share in 2007. 4Q 2008 Basic EPS – GAAP Basis $1.09
4Q 2008 Results vs. 4Q 2007
• Electric distribution deliveries declined 1.1 million megawatt-hours (MWH), or 4%. Industrial
deliveries decreased 900,000 MWH or 10% - the majority coming from reduced usage from
steel and automotive customers. Commercial deliveries declined 209,000 MWH, or 2%, while
residential deliveries increased slightly. Heating-degree-days were 13% higher than the same
period last year and 5% above normal. The resulting lower distribution delivery revenues
decreased earnings by $0.01 per share.
• Total electric generation sales decreased 1.5 million MWH, or 5%. Retail generation sales
decreased 1.3 million MWH, or 5%, reflecting reduced industrial usage and fewer renewals of
competitive commercial contracts in the PJM Interconnection LLC (PJM) market. Wholesale
electricity sales decreased 0.2 million MWH, or 3%, due to a soft market. Generation revenues,
adjusted to exclude power sourced from third-party auction suppliers for our Jersey Central
Power & Light Company (JCP&L) and Pennsylvania Power Company (Penn) customers as well
as the Ohio fuel rider in 2008 (instead of the deferral accounting used in 2007), increased
earnings by $0.04 per share due to higher wholesale and retail prices.
2. • Net fuel and purchased power expenses reduced earnings by $0.04 per share. Higher fuel costs,
adjusted for the impact of the Ohio fuel rider in 2008, net of last year’s deferral accounting,
reduced earnings by $0.09 per share. The increase in fuel expenses is primarily due to higher
coal transportation costs and related fuel surcharges. Lower purchased power expenses,
excluding JCP&L and Penn purchases from third-party auction suppliers, increased earnings by
$0.05 per share. The reduction in purchased power costs was primarily due to fewer spot
purchases in PJM and Midwest Independent Transmission System Operator, Inc. (MISO).
• FirstEnergy Solutions Corp. (FES) assigned two existing Powder River Basin contracts to a
third party in order to reduce the forecasted 2010 long coal position as a result of expected
deliveries from FES’ joint venture in the Signal Peak mining project in Montana. The
assignment of these contracts resulted in a $0.04 per share contribution to earnings.
• Lower generation O&M expenses increased earnings by $0.12 per share. Fewer scheduled
outages at the fossil plants and a $0.01 per share gain on sale of emission allowances in the
fourth quarter of 2008 increased earnings by $0.05 per share. Lower nuclear operating expenses
increased earnings by $0.04 per share, mainly due to the absence of a refueling outage in the
fourth quarter of 2008 compared to a Beaver Valley Unit 1 refueling outage in the fourth quarter
of 2007. The remaining $0.03 per share benefit from lower generation O&M expenses reflects
reduced rental costs due to the purchase by FirstEnergy Nuclear Generation Corp. (NGC) of
certain third-party lessor equity interests in our Ohio utilities’ existing sale and leaseback
arrangements for the Perry Nuclear Power Plant and Unit 2 of the Beaver Valley Power Station.
• Lower energy delivery expenses increased earnings by $0.08 per share. Expenses benefited
from cost control measures, lower uncollectible expenses, and more resources devoted to capital
projects this quarter compared to the same period last year.
• Lower transmission costs incurred by FES increased earnings by $0.07 per share, primarily due
to congestion expense settlements in the fourth quarter of 2008.
• Reduced pension expense and other employee benefits each increased earnings by $0.02 per
share.
• Higher Ohio transition cost amortization reduced earnings by $0.02 per share.
• Incremental property additions (including NGC’s purchase of lessor equity interests described
above) increased depreciation expense by $0.03 per share.
• General taxes reduced earnings by $0.03 per share, primarily due to higher franchise and
property taxes.
• Decreased investment income from corporate-owned life insurance of $0.04 per share was
partially offset by a $0.02 per share increase in nuclear decommissioning trust income.
Consolidated Report to the Financial Community – 4th Quarter 2008 2
3. • Higher financing costs decreased earnings by $0.01 per share. The increase in financing costs is
attributable to the issuance of first mortgage bonds by Ohio Edison Company (OE) and The
Cleveland Electric Illuminating Company (CEI) in the fourth quarter of 2008. The higher
interest expense was partially offset by higher capitalized interest related to our construction
program.
• A lower effective income tax rate increased earnings by $0.09 per share. This year’s lower rate
principally reflects the ramp up of the manufacturing deduction percentage, continuing phase-
out of the Ohio state income tax, lower interest on reserved tax issues and the utilization of net
operating losses to reduce state income taxes. For 2009, we expect that the marginal tax rate will
be approximately 38%.
• During the quarter, a $0.12 per share reduction in earnings was recognized from the impairment
of securities held in trust for future nuclear decommissioning activities.
2009 Earnings Guidance
FirstEnergy anticipates release of 2009 earnings guidance following regulatory clarity in Ohio.
Please refer to page 16 of this report for a summary of selected earnings changes from 2008 to
2009. The summary does not include the potential effects of the PUCO approving either the
Amended Application containing the proposed Stipulated Electric Security Plan (ESP) or a Market
Rate Offer (MRO) that may be implemented in Ohio and is not intended to provide earnings
guidance.
* The 2008 GAAP to non-GAAP reconciliation statements can be found on page 14 of this report
and all GAAP to non-GAAP reconciliation statements are available on the Investor Information
section of FirstEnergy Corp.'s Web site at www.firstenergycorp.com/ir.
For additional information, please contact:
Ronald E. Seeholzer Rey Y. Jimenez Irene M. Prezelj
Vice President, Investor Relations Manager, Investor Relations Manager, Investor Relations
(330) 384-5415 (330) 761-4239 (330) 384-3859
Consolidated Report to the Financial Community – 4th Quarter 2008 3
4. FirstEnergy Corp.
Consolidated Statements of Income
(In millions, except for per share amounts)
Three Months Ended Dec. 31 Twelve Months Ended Dec. 31
2008 2007 Change 2008 2007 Change
Revenues
Electric sales $ 2,990 $ 2,882 $ 108 $ 12,693 $ 11,944 $ 749
(1)
Other 211 197 14 934 858 76
(2)
3,201 3,079 122 13,627 12,802 825
(3) Total Revenues
Expenses
Fuel 340 291 49 1,340 1,178 162
(4)
Purchased power 915 922 (7) 4,291 3,836 455
(5)
Other operating expenses 667 831 (164) 3,042 3,086 (44)
(6)
Provision for depreciation 177 161 16 677 638 39
(7)
Amortization of regulatory assets 258 234 24 1,053 1,019 34
(8)
Deferral of new regulatory assets (55) (125) 70 (316) (524) 208
(9)
General taxes 182 165 17 778 754 24
(10)
2,484 2,479 5 10,865 9,987 878
Total Expenses
(11)
717 600 117 2,762 2,815 (53)
(12) Operating Income
Other Income (Expense)
Investment income (loss) (14) 27 (41) 59 120 (61)
(13)
Interest expense (195) (182) (13) (754) (775) 21
(14)
Capitalized interest 16 11 5 52 32 20
(15)
(193) (144) (49) (643) (623) (20)
Total Other Expense
(16)
524 456 68 2,119 2,192 (73)
(17) Income Before Income Taxes
Income taxes 192 188 4 777 883 (106)
(18)
$ 332 $ 268 $ 64 $ 1,342 $ 1,309 $ 33
(19) Net Income
(20) Earnings Per Share of Common Stock
Basic $ 1.09 $ 0.88 $ 0.21 $ 4.41 $ 4.27 $ 0.14
(21)
Diluted $ 1.09 $ 0.87 $ 0.22 $ 4.38 $ 4.22 $ 0.16
(22)
(23) Weighted Average Number of
Common Shares Outstanding
Basic 304 304 - 304 306 (2)
(24)
Diluted 306 308 (2) 307 310 (3)
(25)
Consolidated Report to the Financial Community – 4th Quarter 2008 4
5. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended December 31, 2008
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 1,973 $ 339 $ 678 $ - $ 2,990
(1)
Other 142 68 21 (20) 211
(2)
Internal revenues - 702 - (702) -
(3)
Total Revenues 2,115 1,109 699 (722) 3,201
(4)
Expenses
Fuel 1 339 - - 340
(5)
Purchased power 933 131 553 (702) 915
(6)
Other operating expenses 360 236 106 (35) 667
(7)
Provision for depreciation 108 64 - 5 177
(8)
Amortization of regulatory assets 255 - 3 - 258
(9)
Deferral of new regulatory assets (55) - - - (55)
(10)
General taxes 149 27 2 4 182
(11)
Total Expenses 1,751 797 664 (728) 2,484
(12)
Operating Income 364 312 35 6 717
(13)
Other Income (Expense)
Investment income (loss) 37 (33) - (18) (14)
(14)
Interest expense (105) (36) - (54) (195)
(15)
Capitalized interest 1 14 - 1 16
(16)
Total Other Expense (67) (55) - (71) (193)
(17)
Income Before Income Taxes 297 257 35 (65) 524
(18)
119 14 (43) 192
Income taxes 102
(19)
Net Income $ 178 $ 155 $ 21 $ (22) $ 332
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 5
6. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended December 31, 2007
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 1,922 $ 343 $ 617 $ - $ 2,882
(1)
Other 149 36 11 1 197
(2)
Internal revenues - 691 - (691) -
(3)
Total Revenues 2,071 1,070 628 (690) 3,079
(4)
Expenses
Fuel 1 290 - - 291
(5)
Purchased power 899 186 528 (691) 922
(6)
Other operating expenses 445 321 87 (22) 831
(7)
Provision for depreciation 103 51 - 7 161
(8)
Amortization of regulatory assets 226 - 8 - 234
(9)
Deferral of new regulatory assets (72) - (53) - (125)
(10)
General taxes 137 26 1 1 165
(11)
Total Expenses 1,739 874 571 (705) 2,479
(12)
Operating Income 332 196 57 15 600
(13)
Other Income (Expense)
Investment income 50 3 - (26) 27
(14)
Interest expense (109) (28) - (45) (182)
(15)
Capitalized interest 4 7 - - 11
(16)
Total Other Expense (55) (18) - (71) (144)
(17)
Income Before Income Taxes 277 178 57 (56) 456
(18)
110 71 23 (16) 188
Income taxes
(19)
Net Income $ 167 $ 107 $ 34 $ (40) $ 268
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 6
7. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended Dec. 31, 2008 vs. Three Months Ended Dec. 31, 2007
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 51 $ (4) $ 61 $ - $ 108
(1)
Other (7) 32 10 (21) 14
(2)
Internal revenues - 11 - (11) -
(3)
Total Revenues 44 39 71 (32) 122
(4)
Expenses
Fuel - 49 - - 49
(5)
Purchased power 34 (55) 25 (11) (7)
(6)
Other operating expenses (85) (85) 19 (13) (164)
(7)
Provision for depreciation 5 13 - (2) 16
(8)
Amortization of regulatory assets 29 - (5) - 24
(9)
Deferral of new regulatory assets 17 - 53 - 70
(10)
General taxes 12 1 1 3 17
(11)
Total Expenses 12 (77) 93 (23) 5
(12)
Operating Income 32 116 (22) (9) 117
(13)
Other Income (Expense)
Investment income (loss) (13) (36) - 8 (41)
(14)
Interest expense 4 (8) - (9) (13)
(15)
Capitalized interest (3) 7 - 1 5
(16)
Total Other Expense (12) (37) - - (49)
(17)
Income Before Income Taxes 20 79 (22) (9) 68
(18)
9 31 (9) (27) 4
Income taxes
(19)
Net Income $ 11 $ 48 $ (13) $ 18 $ 64
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 7
8. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended December 31, 2008
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 8,540 $ 1,333 $ 2,820 $ - $ 12,693
(1)
Other 626 238 82 (12) 934
(2)
Internal revenues - 2,968 - (2,968) -
(3)
Total Revenues 9,166 4,539 2,902 (2,980) 13,627
(4)
Expenses
Fuel 2 1,338 - - 1,340
(5)
Purchased power 4,161 779 2,319 (2,968) 4,291
(6)
Other operating expenses 1,648 1,142 374 (122) 3,042
(7)
Provision for depreciation 417 243 - 17 677
(8)
Amortization of regulatory assets 1,002 - 51 - 1,053
(9)
Deferral of new regulatory assets (329) - 13 - (316)
(10)
General taxes 640 109 6 23 778
(11)
Total Expenses 7,541 3,611 2,763 (3,050) 10,865
(12)
Operating Income 1,625 928 139 70 2,762
(13)
Other Income (Expense)
Investment income (loss) 170 (34) 1 (78) 59
(14)
Interest expense (410) (152) (1) (191) (754)
(15)
Capitalized interest 3 44 - 5 52
(16)
Total Other Expense (237) (142) - (264) (643)
(17)
Income Before Income Taxes 1,388 786 139 (194) 2,119
(18)
555 56 (148) 777
Income taxes 314
(19)
Net Income $ 833 $ 472 $ 83 $ (46) $ 1,342
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 8
9. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended December 31, 2007
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 8,069 $ 1,316 $ 2,559 $ - $ 11,944
(1)
Other 657 152 37 12 858
(2)
Internal revenues - 2,901 - (2,901) -
(3)
8,726 4,369 2,596 (2,889) 12,802
Total Revenues
(4)
Expenses
Fuel 5 1,173 - - 1,178
(5)
Purchased power 3,733 764 2,240 (2,901) 3,836
(6)
Other operating expenses 1,700 1,160 305 (79) 3,086
(7)
Provision for depreciation 404 204 - 30 638
(8)
Amortization of regulatory assets 991 - 28 - 1,019
(9)
Deferral of new regulatory assets (371) - (153) - (524)
(10)
General taxes 623 107 4 20 754
(11)
Total Expenses 7,085 3,408 2,424 (2,930) 9,987
(12)
Operating Income 1,641 961 172 41 2,815
(13)
Other Income (Expense)
Investment income 240 16 1 (137) 120
(14)
Interest expense (456) (172) (1) (146) (775)
(15)
Capitalized interest 11 20 - 1 32
(16)
Total Other Expense (205) (136) - (282) (623)
(17)
Income Before Income Taxes 1,436 825 172 (241) 2,192
(18)
574 330 69 (90) 883
Income taxes
(19)
Net Income $ 862 $ 495 $ 103 $ (151) $ 1,309
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 9
10. FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended Dec. 31, 2008 vs. Twelve Months Ended Dec. 31, 2007
Ohio
Energy Competitive Transitional Other &
Delivery Energy Generation Reconciling
Services (a) Services (b) Services (c) Adjustments (d) Consolidated
Revenues
Electric sales $ 471 $ 17 $ 261 $ - $ 749
(1)
Other (31) 86 45 (24) 76
(2)
Internal revenues - 67 - (67) -
(3)
440 170 306 (91) 825
Total Revenues
(4)
Expenses
Fuel (3) 165 - - 162
(5)
Purchased power 428 15 79 (67) 455
(6)
Other operating expenses (52) (18) 69 (43) (44)
(7)
Provision for depreciation 13 39 - (13) 39
(8)
Amortization of regulatory assets 11 - 23 - 34
(9)
Deferral of new regulatory assets 42 - 166 - 208
(10)
General taxes 17 2 2 3 24
(11)
Total Expenses 456 203 339 (120) 878
(12)
Operating Income (16) (33) (33) 29 (53)
(13)
Other Income (Expense)
Investment income (loss) (70) (50) - 59 (61)
(14)
Interest expense 46 20 - (45) 21
(15)
Capitalized interest (8) 24 - 4 20
(16)
Total Other Expense (32) (6) - 18 (20)
(17)
Income Before Income Taxes (48) (39) (33) 47 (73)
(18)
(19) (16) (13) (58) (106)
Income taxes
(19)
Net Income $ (29) $ (23) $ (20) $ 105 $ 33
(20)
(a) Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort
generation service for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.
(b) Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to
affiliated electric utilities.
(c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries and MISO transmission
revenues and expenses related to the delivery of generation load.
(d) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses
and elimination of intersegment transactions.
Consolidated Report to the Financial Community – 4th Quarter 2008 10
11. FirstEnergy Corp.
Financial Statements
(In millions)
Condensed Consolidated Balance Sheets
As of As of
Assets Dec. 31, 2008 Dec. 31, 2007
Current Assets:
Cash and cash equivalents $ 545 $ 129
Receivables 1,471 1,421
Other 1,037 680
Total Current Assets 3,053 2,230
Property, Plant and Equipment 17,723 15,383
Investments 3,017 3,598
Deferred Charges and Other Assets 9,728 11,100
Total Assets $ 33,521 $ 32,311
Liabilities and Capitalization
Current Liabilities:
Currently payable long-term debt $ 2,476 $ 2,014
Short-term borrowings 2,397 903
Accounts payable 794 777
Other 1,431 1,454
Total Current Liabilities 7,098 5,148
Capitalization:
Common stockholders' equity 8,283 8,977
Long-term debt and other long-term obligations 9,100 8,869
Total Capitalization 17,383 17,846
Noncurrent Liabilities 9,040 9,317
Total Liabilities and Capitalization $ 33,521 $ 32,311
General Information
Three Months Ended Dec. 31 Twelve Months Ended Dec. 31
2008 2007 2008 2007
Debt and equity securities redemptions $ 301 $ 474 $ 1,034 $ 2,039
New long-term debt issues $ 736 $ 420 $ 1,367 $ 1,520
Short-term borrowings increase (decrease) $ 5 $ 330 $ 1,494 $ (205)
Property additions (a) $ 711 $ 506 $ 2,888 $ 1,633
(a)
Includes purchase of lessor equity interests in Beaver Valley Unit 2 and Perry in the twelve months ended
December 31, 2008.
Adjusted Capitalization
As of December 31
2008 % Total 2007 % Total
Total common equity $ 8,283 36% $ 8,977 40%
Long-term debt and other long-term obligations 9,100 40% 8,869 40%
Currently payable long-term debt 2,476 11% 2,014 9%
Short-term borrowings 2,397 11% 903 4%
Adjustments:
Sale-leaseback net debt equivalents 1,428 6% 1,990 9%
JCP&L securitization debt and cash (842) -4% (397) -2%
$ 22,842 100% $ 22,356 100%
Total
Consolidated Report to the Financial Community – 4th Quarter 2008 11
12. FirstEnergy Corp.
Financial Statements
(In millions)
Condensed Consolidated Statements of Cash Flows
Three Months Ended Dec. 31 Twelve Months Ended Dec. 31
2008 2007 2008 2007
Cash flows from operating activities
Net income $ 332 $ 268 $ 1,342 $ 1,309
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, amortization, and deferral of regulatory assets 380 270 1,414 1,133
Deferred purchased power and other costs (63) (81) (226) (346)
Deferred income taxes and investment tax credits 88 149 366 (9)
Deferred rents and lease market valuation liability (33) (58) (95) (99)
Pension trust contribution - - - (300)
Cash collateral, net (52) (18) (31) (68)
Electric service prepayment programs (19) (23) (77) (75)
Change in working capital and other 158 (23) (474) 149
Cash flows provided from operating activities 791 484 2,219 1,694
Cash flows provided from (used for) financing activities 266 100 1,180 (1,342)
Cash flows used for investing activities (693) (485) (2,983) (313)
Net increase in cash and cash equivalents $ 364 $ 99 $ 416 $ 39
Deferrals and Amortizations
Three Months Ended Dec. 31 Twelve Months Ended Dec. 31
2008 2007 Change 2008 2007 Change
Ohio Rate Plans and Transmission Deferrals
$ 1,622 $ 1,817 $ 1,847 $ 1,863
Regulatory Assets - Beginning
Interest on shopping incentives 7 8 $ (1) 31 36 $ (5)
MISO costs and interest 16 11 5 8 56 (48)
RCP distribution reliability costs and interest 24 23 1 153 166 (13)
RCP fuel costs and interest 1 45 (44) (6) 107 (113)
$ 48 $ 87 $ (39) $ 186 $ 365 $ (179)
Current period deferrals
Amortization
Ohio transition costs $ (73) $ (69) $ (4) $ (307) $ (291) $ (16)
Shopping incentives (35) (29) (6) (128) (123) (5)
MISO costs (17) (9) (8) (52) (29) (23)
Other (2) (7) 5 (1) (23) 22
$ (127) $ (114) $ (13) $ (488) $ (466) $ (22)
Current period amortization
$ 1,536 $ 1,847 $ 1,536 $ 1,847
Regulatory Assets - Ending
Pennsylvania Deferred PJM Costs
$ 338 $ 227 $ 255 $ 157
Beginning balance
(12) 27 $ (39) 71 97 $ (26)
Net deferral (recovery) of PJM costs
$ 326 $ 254 $ 326 $ 254
Ending balance
New Jersey Deferred Energy Costs
$ 210 $ 330 $ 322 $ 369
Beginning balance
Net deferral (recovery) of energy costs 10 (8) $ 18 (102) (47) $ (55)
$ 220 $ 322 $ 220 $ 322
Ending balance
Consolidated Report to the Financial Community – 4th Quarter 2008 12
14. FirstEnergy Corp.
Special Items and EPS Reconciliations
(In millions, except for per share amounts)
Special Items
Three Months Ended Dec. 31 Twelve Months Ended Dec. 31
2008 2007 2008 2007
Pre-tax Items - Income Increase (Decrease)
Gain on sale of non-core assets (a) $ - $ - $ 32 $ 21
Saxton decommissioning costs regulatory assets (b) - - - 27
Trust securities impairment (c) (60) (10) (123) (26)
Litigation settlement (a) - - 15 -
$ (60) $ (10) $ (76) $ 22
Total-Pretax Items
EPS Effect $ (0.12) $ (0.02) $ (0.16) $ 0.04
(a) Included in quot;Revenues - Otherquot;
(b) Included in quot;Deferral of new regulatory assetsquot;
(c) Included in quot;Investment incomequot;
2008 Earnings Per Share (EPS)
(Reconciliation of GAAP to Non-GAAP)
ACTUAL ACTUAL
Three Months Twelve Months
Ended Dec. 31 Ended Dec. 31
$ 1.09 $ 4.41
Basic EPS (GAAP basis)
Excluding Special Items:
Gain on sale of non-core assets - (0.06)
Litigation settlement - (0.03)
Trust securities impairment 0.12 0.25
$ 1.21 $ 4.57
Basic EPS (Non-GAAP basis)
Consolidated Report to the Financial Community – 4th Quarter 2008 14
15. FirstEnergy Corp.
Liquidity and Capital Expenditures
Liquidity position as of January 31, 2009
Company Type Maturity Amount (M) Available (M)
(1)
Revolving Aug. 2012 $2,750 $405
FirstEnergy
FirstEnergy & FirstEnergy Solutions Revolving May 2009 300 300
(2)
FirstEnergy Bank Lines 120 20
Various
(3)
FirstEnergy Generation Corp. Term Loan 300 300
Oct. 2009
Various(4)
OH & PA Utilities Receivables Financing 550 469
(1)
FirstEnergy Corp. and subsidiary borrowers. Subtotal: $4,020 $1,494
(2) 1,110
$100M matures November 30, 2009; $20M uncommitted Cash: -
line of credit with no maturity date. Total: $4,020 $2,604
(3)
Drawn amounts are payable within 30 days and may not
be reborrowed.
(4)
$370M expires March 21, 2009; $180M expires December 18, 2009.
2009 Capital Expenditures
(in millions)
Projected non-AQC capital expenditures:
Projected Non-AQC Capital 2010-2013
Spending by Business Unit 2009 Average
Energy Delivery $ 701 $ 804
Nuclear 260 354
Fossil 219 255
Corporate & Other 58 116
Subtotal without AQC $ 1,238 $ 1,529
Projected capital expenditures for AQC:
Projected AQC Capital Spending 2009 2010
AQC* $ 414 $ 92
Change from Prior year (224) (322)
*Excludes the Burger Plant since a decision has been deferred regarding
the future of the AQC project or closure of the plant.
Consolidated Report to the Financial Community – 4th Quarter 2008 15
16. FirstEnergy Corp.
2009 Earnings Drivers
2009 Earnings Drivers
The following represents a high-level summary of selected items that are expected to impact normalized earnings in
2009 compared to the prior year. These estimates are presented on a pre-tax basis and do not reflect impacts of
the Amended Application containing the proposed Stipulated ESP pending before the Public Utilities Commission of
Ohio (PUCO). This list is not all-inclusive and is not intended to provide earnings guidance.
Positive earnings drivers in 2009 are expected to include:
O&M reductions – more than $100M, $0.20 per share earnings impact
Represents anticipated cost savings from staffing adjustments, changes in compensation structure, fossil
plant outage schedule changes and general cost-saving measures.
Ohio distribution rate increase – $75M, $0.15 per share earnings impact
Reflects approval by the PUCO on January 21, 2009, of an annual increase of $137 million less
amortization of regulatory assets of $53 million, adjusted to reflect partial recovery in 2009 due to
January 23, 2009, effective date for OE and The Toledo Edison Company (TE) rates and May 1, 2009,
effective date for CEI rates.
Reduced Regulatory Transition Charge (RTC) amortization expense – $185M, $0.38 per share
earnings impact
Reflects the end of transition cost amortization for OE and TE under the Rate Certainty Plan (RCP), offset
by an increase in CEI RTC amortization expense.
Increased generation margin (affiliates) – FES is serving 75% of Ohio retail customer load for first quarter
of 2009 pursuant to the results of the request for proposal (RFP) conducted on December 31, 2008, vs.
100% under the 2008 power supply agreement (PSA) with the Ohio utilities. The average 2008 rate FES
received under the PSA with the Ohio utilities was $46.40 per MWH.
Negative earnings drivers in 2009 are expected to include:
Increased Pension/OPEB expense – $230M, ($0.47) per share earnings impact
Reflects expense of ($0.35) per share in 2009 versus income of $0.12 per share in 2008, due primarily to
market-related declines in the value of plan investments.
Additional nuclear refueling outage – $30M, ($0.06) per share earnings impact
Reflects three planned nuclear refueling outages in 2009 compared to two in 2008.
Generation output – 2009 output is projected to be 80.6 million MWH vs. 2008 output of 82.4 million MWH.
Reduced Ohio RTC recovery – $560M, ($1.14) per share earnings impact
Represents the full-year impact of the end of RTC recovery for OE and TE and reduced recovery at CEI
projected to begin in June 2009.
Change in third-party power supply contracts for Metropolitan Edison Company (Met-
Ed)/Pennsylvania Electric Company (Penelec) totaling 4.5 million MWH – The end of these contracts
results in increased purchased power expense of $7.50 per MWH for Met-Ed/Penelec (or a total of $34M,
earnings impact of ($0.07) per share). Additionally, FES is obligated to replace this supply at a price of
$41.50, resulting in a lost wholesale sales opportunity.
Higher fuel expense – $240M, ($0.49) per share earnings impact
Due primarily to eastern coal contract re-openers, emission allowances, the price of nuclear fuel and
includes a positive $25 million coal inventory adjustment reported in 3Q 2008.
Reduced Ohio distribution reliability deferral – $125M, ($0.25) per share earnings impact
End of deferral accounting approved under the RCP, net of over-recovery of OE and TE RTC in 2008.
Increased depreciation – $45M, ($0.09) per share earnings impact
Increased general taxes – $40M, ($0.08) per share earnings impact
Consolidated Report to the Financial Community – 4th Quarter 2008 16
17. RECENT DEVELOPMENTS
Record Generation Output
FES set a new generation output record of 82.4 million MWH during 2008, an increase over the previous record
of 82.0 million MWH established in 2006. This generation record reflects an all-time high for the nuclear fleet,
which set a new generation output record of 32.2 million MWH during 2008, a 6% increase over the previous
record established in 2007. These records reflect, in part, efforts to increase fleet output through incremental, low-
cost upgrades and enhancements. During 2008, more than 100 megawatts (MW) of nuclear and fossil capacity
enhancements were completed.
Wind Power Contract
On December 23, 2008, FES purchased a 17-year contract from Constellation Energy Commodities Group for the
procurement of 99 MW of wind power from Twin Groves Wind Farm in Illinois. This purchase expands FES’
renewable energy portfolio and brings its total wind power capacity under contract to 376 MW.
Beaver Valley Achieves Industry Excellence
On January 22, 2009, the Institute of Nuclear Power Operations (INPO) informed FirstEnergy that the Beaver
Valley Power Station achieved excellent industry performance in the most recent plant evaluation and assessment
administered by the INPO. The achievement was awarded to Beaver Valley for the first time in its 33 years of
operation and places it among the industry’s top performers.
R. E. Burger Plant Deadline Extension
On December 30, 2008, FirstEnergy filed a motion with the U.S. District Court for the Southern District of Ohio,
requesting an extension of the December 31, 2008, deadline to decide whether to install scrubbers and other
environmental equipment for two 156 MW coal fired units at the R.E. Burger Plant, repower the units by
switching from coal to natural gas, or to shut them down in the next two years. On January 30, 2009, the Court
approved an extension until March 31, 2009.
Fremont Energy Center
In December 2008, the construction schedule for Fremont Energy Center was extended until 2012, when the plant
is expected to be brought on line. Original plans called for completion of the plant by 2010. The original cost
estimate of $208 million to complete the plant may also be revised as a result of the new construction schedule.
Approximately $41 million of the incremental capital was invested in 2008.
Financing Activities
The September 2008 automatically effective shelf registration filed with the U.S. Securities and Exchange
Commission provides FirstEnergy and its utility operating subsidiaries with the flexibility to issue and sell equity,
secured and unsecured debt and other similar securities from time to time. The following long-term debt securities
have been issued and sold under the shelf registration since the end of the third quarter of 2008:
Amount Date
Issuer Rate Type
(in millions) Issue Maturity
Ohio Edison $275 8.25% FMB 10/20/2008 2038
Ohio Edison $25 8.25% FMB 10/20/2008 2018
Cleveland Electric $300 8.875% FMB 11/18/2008 2018
Metropolitan Edison $300 7.70% Sr. Notes 1/20/2009 2019
Jersey Central Power & Light $300 7.35% Sr. Notes 1/27/2009 2019
In addition, regulatory authority has been granted for TE and Penn to issue up to $300 million and $100 million of
long-term debt, respectively.
Consolidated Report to the Financial Community – 4th Quarter 2008 17
18. Ohio Regulatory Update
On November 25, 2008, the PUCO issued an order denying the MRO filing made by OE, CEI and TE
(collectively, Ohio Companies) that proposed procurement of generation supply for its Ohio customers through a
competitive bidding process. On December 22, 2008, the Ohio Companies filed an application for rehearing on
the MRO and on January 21, 2009, the PUCO granted the Ohio Companies’ application for rehearing for further
consideration of the matter.
On July 31, 2008, the Ohio Companies filed an ESP with the PUCO. On December 19, 2008, the PUCO
substantially modified and approved an ESP for the Ohio Companies. The Ohio Companies withdrew their
application for the ESP on December 22, 2008, as allowed under Ohio law. The Ohio Companies cited that the
ESP, as modified by the PUCO, no longer maintained a reasonable balance between rate stability for customers
and a fair return on the Ohio Companies’ investments to serve those customers. The Ohio Companies also notified
the PUCO of their intent to continue their current rate plan and tariffs as of January 1, 2009, as provided for under
SB221.
On December 31, 2008, the Ohio Companies conducted a competitive bidding process, using a RFP format
administered by an independent third party, for the procurement of electric generation for retail customers from
January 5, 2009 through March 31, 2009. Four qualified wholesale bidders were selected, including FES, for 97%
of the tranches offered in the RFP. The average winning bid price was equivalent to a retail rate of 6.98 cents per
kilowatt-hour (KWH). Subsequent to the RFP, the remaining 3% of the Ohio Companies’ wholesale energy and
capacity needs were obtained through a bilateral contract with the lowest bidder in the RFP procurement. From
January 1, 2009, through January 4, 2009, and during the period when only 97% of the Ohio Companies’ load was
served under the RFP, wholesale energy and capacity were purchased from the Midwest Independent System
Operator (MISO). The resulting weighted average retail price for 100% of the Ohio Companies’ needs is 6.95
cents per KWH.
On January 7, 2009, the PUCO ordered the Ohio Companies to file revised tariffs reflecting the termination of
OE’s and TE’s Regulatory Transition Charges as well as the termination of fuel recovery riders for each of the
Ohio Companies by January 12, 2009, to be effective on January 1, 2009, on a service-rendered basis. On
January 9, 2009, the Ohio Companies filed a Motion to Stay to delay the effective date of the January 7, 2009,
order in its entirety until the resolution of any appeal of the order. Also on January 9, 2009, the Ohio Companies
filed an application for expedited rehearing, asking the PUCO to reconsider its January 7, 2009, decision. In a
third filing on January 9, 2009, the Ohio Companies requested a fuel rider, proposing to recover the difference
between costs incurred by the Ohio Companies to purchase power under the RFP process described above and the
generation charges paid by their customers. A January 9, 2009, Entry from the PUCO approved the Motion to
Stay. On January 14, 2009, the PUCO temporarily approved the fuel rider, subject to a future prudence review.
The PUCO also issued an Entry requiring the Ohio Companies to concurrently implement the original January 7,
2009, order.
On January 21, 2009, the PUCO granted the Ohio Companies an increase in distribution rates in the aggregate
amount of $136.6 million ($53.3 million represents the recovery of regulatory assets). New distribution rates were
effective January 23, 2009, for OE and TE customers and will be effective May 1, 2009, for CEI customers.
On February 19, 2009, the Ohio Companies filed an amended ESP application, including an attached Stipulation
and Recommendation associated with the case that was signed by the Ohio Companies, the Staff of the PUCO,
and many of the intervening parties representing a diverse range of interests.
This Stipulated ESP provides generation price stability until June 2011, provides the PUCO flexibility to manage
overall price trends, and settles pricing and service arrangements for the distribution of electric service through
December 2011.
Consolidated Report to the Financial Community – 4th Quarter 2008 18
19. Key provisions of the Stipulated ESP include:
In April and May 2009, generation will be supplied to the Ohio Companies from FES at $66.68 per MWH,
the average rate resulting from the December 2008 RFP process.
The deferral of a portion of the purchased power costs for CEI will continue during April and May, with
recovery of the deferred balance plus carrying costs commencing June 1, 2011.
For the period beginning June 1, 2009, through May 31, 2011, retail generation rates will be set from the
results of a descending-clock competitive bidding process, or CBP. In the CBP, the Ohio Companies will
procure, on a slice-of-system basis, 100% of their full requirements supply, including transmission and
ancillaries. The bidding process will be conducted by an independent bid manager. The PUCO also has the
option to phase in the resulting generation pricing for retail customers subject to specified limits.
The promotion of economic development and providing rate discounts for qualifying schools.
CEI will write off 50% of the Extended RTC balance as of May 31, 2009, estimated to be approximately $215
million, and CEI RTC charges will be reduced accordingly commencing on June 1, 2009. If the Stipulated
ESP is approved, one-time charges associated with implementing the ESP would be approximately $250
million (including the CEI Extended RTC balance), or $0.53 per share of common stock.
The Ohio Companies’ commitment to a base distribution rate freeze through the end of 2011.
A delivery service improvement rider will be established effective April 1, 2009, through December 31, 2011.
The recovery of deferrals previously approved by the PUCO.
Establishment of a collaborative process with various signatory parties to the Stipulated ESP and third-party
administrators for the implementation of energy efficiency programs that will be subject to cost recovery.
The Ohio Companies and the signatory parties have requested PUCO approval of certain provisions related to
near-term generation service by March 4, 2009, and approval of the full Stipulated ESP by March 25, 2009.
Amendments to Market-Based Rate Tariffs
On October 24, 2008, FES, FirstEnergy Generation Corp., NGC, and FirstEnergy Generation Mansfield Unit 1
Corp. (the Applicants) filed proposed amendments to their market-based rate tariffs with the Federal Energy
Regulatory Commission (FERC). In preparation for providing wholesale power supply to Ohio customers
beginning January 2009 under either an ESP or MRO described above, the Applicants requested a determination
that FERC requirements to obtain prior approvals for affiliate sales do not apply to power sales made by FES to
CEI, OE and TE. On December 23, 2008, the FERC approved the request by waiving FERC’s required
preapproval for affiliated power sales, effective December 24, 2008.
Met-Ed Transmission Rider
On May 22, 2008, the Pennsylvania Public Utility Commission (PPUC) approved the Met-Ed and Penelec annual
updates to their Transmission Service Charge Riders (TSC) for the period June 1, 2008, through May 31, 2009.
The PPUC ordered an investigation to review the reasonableness of Met-Ed’s TSC which included a transition
approach that would recover past under-recovered costs of $144 million plus carrying charges over a 31-month
period and deferral of a portion ($92 million) of projected costs for recovery over a 19-month period beginning
June 1, 2009, through December 31, 2010. Hearings and briefing have been concluded and Met-Ed is awaiting a
final PPUC decision.
Consolidated Report to the Financial Community – 4th Quarter 2008 19
20. Penn Interim Default Service Supply Plan
On January 20, 2009, Penn held an RFP to procure default service for residential and commercial customers. The
PPUC approved the results on January 21, 2009. The average prices of the winning bids for residential and small
commercial customers were $74.80 per MWH and $67.58 per MWH, respectively, and will be reflected in Penn’s
new default service rates that are effective for the period June 2009 through May 2011 for residential customers
and for the period June 2009 through May 2010 for commercial customers.
Met-Ed and Penelec Customer Prepayment Plan and Procurement Plan
On September 25, 2008, Met-Ed and Penelec filed a Voluntary Prepayment Plan with the PPUC that would
provide an opportunity for residential and small commercial customers to prepay an amount on their monthly
electric bills during 2009 and 2010, which would earn interest at 7.5% and be used to reduce electric rates in 2011
and 2012. Met-Ed, Penelec, Office of Consumer Advocate and Office of Small Business Advocates reached a
settlement agreement on the Voluntary Prepayment Plan and have jointly requested that the PPUC approve the
settlement. The Administrative Law Judge issued a decision on January 29, 2009, recommending approval and
adoption of the Settlement without modification.
On February 20, 2009, Met-Ed and Penelec filed a generation procurement plan covering the period January 1,
2011 through May 31, 2013, with the PPUC. The Companies’ plan is designed to provide adequate and reliable
service through a prudent mix of long term, short term and spot market generation supply as required by
Pennsylvania law. The plan proposes a staggered procurement schedule, which varies by customer class. The
Companies have requested PPUC approval of their plan by October 2009.
Met-Ed and Penelec Rate Case Appeals
Several parties to the Met-Ed and Penelec 2006 rate case proceeding filed Petitions for Review with the
Commonwealth Court of Pennsylvania in 2007, asking the court to review the PPUC’s determination on several
issues including: the recovery of transmission (including congestion); the transmission deferral; consolidated tax
savings; the requested generation increase; and recovery of universal service costs from only the residential rate
class. Oral arguments were held on September 10, 2008. The Commonwealth Court issued its decision on
November 7, 2008, which affirmed the PPUC's January 11, 2007, order in all respects, including the deferral and
recovery of transmission and congestion related costs.
New Jersey Governor’s Economic Assistance and Recovery Plan
In support of the New Jersey Governor’s Economic Assistance and Recovery Plan, JCP&L announced its intent to
spend approximately $98 million on infrastructure and energy efficiency projects in 2009. The $40 million that
would be spent on infrastructure projects include substation upgrades, new transformers, distribution line re-
closers and automated breaker operations. Approximately $34 million would be spent implementing demand
response programs as well as expanding existing programs. JCP&L would spend another $11 million on energy
efficiency, specifically replacing transformers and capacitor control systems and installing new LED street lights.
The remaining $13 million would be spent on energy efficiency programs that would complement those currently
being offered. Completing the projects is dependent upon regulatory approval for full and timely recovery of the
costs associated with plan implementation.
Construction of New Transmission Line
On November 24, 2008, the Ohio Power Siting Board authorized the construction of an electric transmission line
in Geauga and Lake counties, which will be owned and operated by American Transmission Systems, Inc. The
14.7 mile long transmission line, which will enhance reliability in the surrounding area, is expected to be
completed and in service by the summer of 2010.
Consolidated Report to the Financial Community – 4th Quarter 2008 20
21. Forward-looking Statements: This Consolidated Report to the Financial Community includes forward-looking
statements based on information currently available to management. Such statements are subject to certain risks and
uncertainties. These statements include declarations regarding our management's intents, beliefs and current
expectations. These statements typically contain, but are not limited to, the terms quot;anticipate,quot; quot;potential,quot; quot;expect,quot;
quot;believe,quot; quot;estimatequot; and similar words. Forward-looking statements involve estimates, assumptions, known and
unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Actual results may differ materially due to the speed and nature of increased competition in the electric utility
industry and legislative and regulatory changes affecting how generation rates will be determined following the expiration
of existing rate plans in Ohio and Pennsylvania, the impact of the PUCO's regulatory process on the Ohio Companies
associated with the ESP and MRO filings, including any resultant mechanism under which the Ohio Companies may not
fully recover costs (including, but not limited to, the costs of generation supply procured by the Ohio Companies,
Regulatory Transition Charges and fuel charges), or the outcome of any competitive generation procurement process in
Ohio, economic or weather conditions affecting future sales and margins, changes in markets for energy services,
changing energy and commodity market prices and availability, replacement power costs being higher than anticipated or
inadequately hedged, the continued ability of our regulated utilities to collect transition and other charges or to recover
increased transmission costs, maintenance costs being higher than anticipated, other legislative and regulatory changes,
revised environmental requirements, including possible greenhouse gas emission regulations, the potential impacts of
the U.S. Court of Appeals' July 11, 2008 decision requiring revisions to the CAIR rules and the scope of any laws, rules
or regulations that may ultimately take their place, the uncertainty of the timing and amounts of the capital expenditures
needed to, among other things, implement the AQC Plan (including that such amounts could be higher than anticipated
or that certain generating units may need to be shut down) or levels of emission reductions related to the Consent
Decree resolving the NSR litigation or other potential regulatory initiatives, adverse regulatory or legal decisions and
outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight) by the
NRC (including, but not limited to, the Demand for Information issued to FENOC on May 14, 2007), the timing and
outcome of various proceedings before the PUCO (including, but not limited to the distribution rate cases and the
generation supply plan filing for the Ohio Companies and the successful resolution of the issues remanded to the PUCO
by the Ohio Supreme Court regarding the RSP and the RCP, including the recovery of deferred fuel costs), Met-Ed's and
Penelec's transmission service charge filings with the PPUC, the continuing availability of generating units and their
ability to operate at or near full capacity, the ability to comply with applicable state and federal reliability standards, the
ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the
ability to improve electric commodity margins and to experience growth in the distribution business, the changing market
conditions that could affect the value of assets held in our nuclear decommissioning trusts, pension trusts and other trust
funds, and cause us to make additional contributions sooner, or in an amount that is larger than currently anticipated, the
ability to access the public securities and other capital and credit markets in accordance with our financing plan and the
cost of such capital, changes in general economic conditions affecting us, the state of the capital and credit markets
affecting us, interest rates and any actions taken by credit rating agencies that could negatively affect our access to
financing or its costs and increase our requirements to post additional collateral to support outstanding commodity
positions, LOCs and other financial guarantees, the continuing decline of the national and regional economy and its
impact on our major industrial and commercial customers, issues concerning the soundness of financial institutions and
counterparties with which we do business, and the risks and other factors discussed from time to time in our SEC filings,
and other similar factors. The foregoing review of factors should not be construed as exhaustive. New factors emerge
from time to time, and it is not possible for our management to predict all such factors, nor assess the impact of any such
factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially
from those contained in any forward-looking statements. We expressly disclaim any current intention to update any
forward-looking statements contained herein as a result of new information, future events, or otherwise.
Consolidated Report to the Financial Community – 4th Quarter 2008 21
